Diversification: A necessity in present times?

The significant technological advances that have taken place over the last thirty years have dramatically changed the way we operate, transact, and ultimately invest. Businesses have extended their product and service supplies beyond their core, and many have moved out of their comfort zone and enriched their product offering.

The owners of Bonnici Bros. Limited have taken a similar step in 2016, in setting up Bonnici Bros. Properties Ltd and transferred all existing properties held by Bonnici Bros. Limited to this entity to create a special focused business area. With more than 45 years of experience, the owners of Bonnici Bros. Limited have managed over time, to diversify their business segment beyond the traditional road building and focused on the property market.

Bonnici Bros. Properties was converted to a public limited liability company and on 30 January 2023 it issued a Base Prospectus, supported by the Final Terms in relation to Tranche 1. Tranche 1 consists of the issue of €12,000,000 (out of a €16,000,000 Bond Issuance Programme), 10-year unsecured 5.25% bond issue.

The bond proceeds will be used to settle existing liabilities incurred to finance the property expansion programme undertaken by Bonnici Bros. Properties as well as to finance the cost of other property projects in the programme. Through the bond issue, Bonnici Bros. Properties will become an active participant in the leasing market of properties that operate in different markets, including hospitality, residential and academic industries. The variety of the different industries that Bonnici Bros. Properties is presently targeting, ensures a proper mix of diversified underlying business and spreads the risk across a diverse set of vertical markets.

The long-term nature of the main asset of the Company requires a substantial amount of investment. The Company’s equity presently already covers nearly 60% of this investment.

The holder of the Bonnici Bros. Properties bonds will not be investing in the road building business, hiring of equipment or sale of heavy-duty vehicles, but primarily in the property market, be it commercial, residential, and special purpose sectors. The bond issuer is the legal owner of the properties out of which Bonnici Bros. Properties earns and continues to earn constant income from existing and future lease and other agreements.

The nature of the business in which the properties owned and developed by Bonnici Bros. Properties operate provides the issuer the essential link to diversified industries, which in today’s times is necessary in view of the interdependency of one industry on another. The great advances in technology have, in fact, enabled such industry interdependencies and further globalization initiatives in the horizon will undoubtedly necessitates additional needs for industry interdependencies.

Through this bond issue, Bonnici Bros. Properties expects to put the Bonnici Bros. name in the capital markets and enrich the diversity of the issuers in that market. The main asset backing up the Bonnici Bros. Properties bond issue is property, exclusively situated in the local market, which property market remains competitive, lucrative and in demand in view of the island’s size limiting factor.



Darren Govus, Chief financial officer of Bonnici Bros. Properties p.l.c.

Bonnici Bros. Properties p.l.c. announced the issue of €12 million unsecured bonds with a coupon rate of 5.25% redeemable in April 2033.  The bonds have a nominal value of €100 per bond and are issued at par.  More information is available from the Base Prospectus dated 30th January 2023, which can be downloaded at www.bbp.com.mt.

The value of the investment can rise as well as fall.  Past performance is not necessarily indicative of future performance. Investors should seek the advice of an independent authorised financial intermediary before deciding to invest in listed financial instruments.

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